Long term spread targets Oncothyreon

optionMONSTER's tracking systems detected a surge of activity in the Seattle-based drug developer, which mainly focuses on cancer treatments. A block of 2,500 January 2014 7 calls was purchased for $2.80, while an equal number of January 2014 10 calls was sold for $1.90. The trade resulted in a cost of $0.90.

Volume was below open interest at the lower strike, so there are two possible explanations. One is that the investor owns ONTY stock and had previously sold the 7s as part of a covered-call strategy . He or she then closed that short and rolled it to the higher strike, giving them the right to collect an additional $3 from the shares climbing.

Alternately, both halves of the trade could have been opened, in which case the strategy would be a bullish call spread . That would earn a maximum profit of 233 percent if the shares close at or above $10 on expiration 17 months from now.

ONTY fell 5.11 percent to $5.20 in late morning trading. It's been basing out after a big drop in March, and came into the session up 19 percent over the preceding week.

Overall option volume in the name is 8 times greater than average so far today.